How to calculate your retention rates

Calculating your retention rates is an essential part of your annual donor review. Sometime during the first quarter of the year, you’ll want to calculate your retention rate for the year that just ended.

In other words, it’s time to figure out how many active donors from 2 years ago repeating their giving last year (the recently completed calendar year).

So in February of 2016, you’ll would calculate the percentage of active donors from 2014 that gave again in 2015. This would be labeled your 2015 Retention Rate.

Here’s a step-by-step plan for how to calculate your retention rates, updated specifically for 2014, to help you avoid wasting time determining what to measure or remembering exactly what you did the year before.

Calculate your 2013 Overall Retention Rate

1) Generate a list (query) all of your 2012 donors.

How many unique donors did you have in 2012?
Count each donor only once even if they made more than one gift in 2012.

2) Of those 2012 donors, how many gave again in 2013?To clarify, we don’t want “total numbers of donors in 2013.” Rather, we want to identify and count those 2012 donors who gave again in 2013.

For simplicity’s sake, ignore for now other 2013 donors who fall into different categories (for instance, donors who gave in 2011 and 2013 but skipped 2012; or new donors).

3) Calculate the % of donors from 2012 who renewed in 2013.

This is your 2013 Overall Donor Retention Rate.

Specifically, take your answer to #2 and divide by your answer to #1, multiply by 100 and stick a % after that number.

For example, lets say we had 2,500 unique donors in 2012 and of those donors, 1,555 renewed their gift in 2013:

6) Divide #5 by #4. Multiply by 100. This is your first-time donor conversion rate for 2013. Record in your spreadsheet.

But what does this do for you? What do you do with this kind of information?

Perhaps you had 150 new donors in 2012. You notice that 78 of those particular donors made a gift in 2013. This means your first-time donor renewal rate is 52%.

78/150=.52 x 100 = 52%

Let’s say this represents a huge increase over 2012’s 25% first-time donor conversion rate. You could reasonably attribute your success to the new donor welcome program you implemented in 2013 where you and your board called each new donor personally to thank them for their gift and then mailed a “new donor welcome” mailing. Clearly, you’ll want to continue that activity and make it a priority!

Also, you can compare your organization to the nonprofit sector as a whole. According to the 2013 Fundraising Effectiveness Project Survey, the overall new donor retention rate for the nonprofit sector in 2012 was 22.9%. Your board should be quite pleased if you demonstrate a 52% new donor retention rate aside this statistic!

Determine your Repeat Donor Renewal Rate

7) How many 2012 donors were NOT first-time donors? In other words, how many 2012 donors had given in at least 1 other year? Your database query might look like this:

Gave in 2012

At least 2 gifts ever

8) How many of those donors from your list above gave in 2013? This database query would do the trick:

Gave in 2012

Gave in 2013

At least 3 gifts ever

9) Now divide #8 by your answer in #7 (and then multiply by 100). This is your Repeat Donor Renewal Rate for 2013. Record in your spreadsheet.

This is an important group. You’ll want to keep an eye on these individuals and make sure you work to keep them giving. You also want to make sure this group’s retention rates continue to improve from year-to-year. If not, you have a problem and you’ll need to try some different tactics to get them back and keep them giving.

Document and analyzeIf you don’t yet have one, create a spreadsheet or table where you can record this information each year. Print out a copy and put it in your hard copy annual fund documentary notebook. Every year, as part of your annual fundraising evaluation, you’ll calculate these figures and then analyze them relative to years past.